2026-08-05 · Source: Insurance Business UK
Summary in 3 Points • AI governance is more critical than adoption speed in the insurance industry • Smaller brokers and MGAs adopt AI faster due to less governance • AI's role in pricing is limited due to lack of explainability --- The insurance industry is shifting its focus from the speed of AI adoption to ensuring AI produces good customer outcomes, especially under regulatory scrutiny. Tim Hardcastle, CEO of INSTANDA, points to the importance of transparency and auditability, aligning with the FCA and EU AI Act's focus on these areas. Smaller brokers and MGAs are adopting AI more rapidly than larger insurers due to less governance, but this also increases their risk exposure. AI adoption varies across the insurance value chain, with data ingestion seeing the highest uptake. However, AI's role in pricing is limited due to the lack of explainability, which is crucial for regulatory compliance. The industry is moving towards being AI-enabled rather than AI-led to maintain transparency and consumer protection.
For the London insurance market, the focus on AI governance over adoption speed could influence underwriting practices and policy wording. Insurers may need to reassess their AI strategies to ensure compliance with regulatory expectations around transparency and customer outcomes. The rapid adoption of AI by smaller brokers and MGAs could lead to competitive advantages but also heighten their risk profiles, impacting pricing and exposure assessments. As AI's role in pricing remains limited, London Market insurers might focus on enhancing data quality and governance to uses AI effectively in other areas such as claims processing and underwriting support.